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Don’t believe the hype about corporations and startups collaborating

BY Fernando L. Mompó on 01 / 03 / 2018

Having the opportunity to attend for a third year in a row 4YFN, the international business and networking platform for the global tech start-up community, it’s a terrific opportunity to feel the quick evolution through time of many different trends related to many sides of innovation.

So, what about this year? Following the current trend, the event program of 4YFN 2018 included more panels, keynotes, pitches and cases about startups and corporations collaborating to innovate than never before. Among many others, we had the chance to know first-hand about the experiences in this area of companies such as Airbus, Google, Banco Sabadell, Telefónica, Gas Natural Fenosa, CaixaBank, SEAT, Aigües de Barcelona, Deutsche Telekom AG, VISA or Unilever.

This year’s program showed events with titles such as “Corporate Innovation Through Working With Startups”; “A Snapshot Of The State Of Corporate/Startup Collaboration”; “A Corporate Beginner’s Guide: How To Engage With Startups Successfully”; “Startup Tsunamis And How Corporates Face Them”; “How A Corporate Supports Exponential Tech Startups”, or “It Takes Two To Tango: How To Bridge Startup And Corporate World In A Successful Co-Creation”.

But the one that most grabbed our attention this time was the one with the catchy title “Corporates and Startups Collaborations: Don’t Believe The Hype!” As we know, “hypeness” is always the peak of any trend, and then we can just expect the traditional “disillusion phase”, which is not necessarily a bad thing because this phase always goes with more rational approaches and down-to-earth expectations (and therefore most likely better results) But, are we already at this point? With a skeptical look to the aforementioned program and the “vibe” of this 4YFN we would probably answer yes to that question.

Pointing out the pains

The talk was presented by Andrea Rosen, Chief Innovation Officer at Cube, a company dedicated to source B2B startups and undertaking strategic matchmaking to pair them with corporate partners in order to implement innovative projects. Andrea started her presentation by declaring that still in many cases corporation projects to collaborate with startups are too much driven by the “cool” effect or the urge to do whatever everybody else is doing. That’s obviously a wrong reason and one that highly increases the chances of failure.

Besides, according to Andrea, in 9 out of 10 cases start-ups are not really really ready to partner. And by “really really ready” she meant able to fully understand the kind of corporation they partner with: culture, goals, etc. but specially the different departments and the relationship between them. Many start-ups get into this kind of partnerships with the “original sin” of thinking their idea or value proposition is everything, and then being too afraid about their idea to be “stolen” or too uncomfortable by corporations wanting to understand how the whole start-up works.

Flexibility needed

For their part, corporations are too often reluctant to be flexible and adapt their way of doing things. For instance, not getting rid of their traditional Terms & Conditions that probably won’t work well with a start-up and instead using some other relationship formulas such a Letter of Intent. In general, Andrea considered consolidated companies should approach relationship with start-up more as the kind of relationship they would have with suppliers.

Corporate innovation teams are usually the ones in charge of this relationship. Many times the problems arise not from the relationship with the internal innovation structure but from its limitations in terms of decision making and budget. Corporations tend to think they will innovate just by “adopting” start-ups but without having first fixing their internal structures to be able to innovate. Do they have a budget for experimentation? Are they able to implement a Minimum Viable Product?

For the CUBE executive two main issues need to be fixed. First, a clear expectation from both sides about each other. And secondly, the work of an external party as a facilitator, enabling to overcome the limitations of what corporations and start-ups can do by themselves. That’s exactly what CUBE is offering, so you can arguably consider Andrea was biased on pointing out the pains of collaboration between corporations and start-ups. Which in any case, it was a fresh and different look among what, yes, it really starts to feel like too much of a hype.